Direct Guarantees

Covers your non-payment risk and increases your borrowing capacity.

The interference of a bank could be imperative if a supplier credit becomes so extensive that there is insufficient cash flow left to run your business properly. It may also occur that a (Dutch) bank is negotiating an irrevocable letter of credit with extended payment terms that was opened by a bank in the country of the buyer.

Direct Guarantee with supplier credit

A Direct Guarantee is an irrevocable commitment of Atradius to the discounting bank. It is a guarantee to the bank whereby the bills of exchange or promissory notes that you have received from your buyer are actually paid by Atradius up to the covered percentage.

Based on the Capital Goods Insurance, Atradius can issue a Direct Guarantee to the bank in order to relieve your debt to the bank. Atradius will indemnify the bank the amount Atradius has guaranteed in case you did not receive payment under the bills of exchange or promissory notes covered bij the Direct Guarantee in Euros in the Eurozone, at the end of the waiting period. This means that as exporter you do not have to finance the supplier’s credit, but are only left with the uninsured portion. For this facility no extra costs or premium are charged.

The following conditions are applicable when a Direct Guarantee is delivered along with a suppliers’s credit:

• Delivery has been completed, or the performance that was agreed upon has been accomplished
• Your buyer has declared in writing that the goods have been taken over in accordance with the export contract
• Bills of exchange or promissory notes are made available for payment in the Netherlands and are properly accepted by your buyer and approved by Atradius
• Your bank is prepared to discount bills of exchange or promissory notes for the covered percentage without taking recourse to you in case of non-payment
• The credit period is longer than twelve months
• Atradius agrees with the recourse risk that evolves from the issue of direct guarantees

Direct Guarantee for an irrevocable letter of credit

If the negotiating bank gives you a cash advance under the letter of credit, it is possible for Atradius to issue a Direct Guarantee to that bank on the basis of your policy. A Direct Guarantee for an irrevocable letter of credit with extended payment terms may relieve your debt with the bank. This also applies to a Direct Guarantee for a supplier’s credit. In both cases you will keep an uninsured portion. For this facility no extra costs or premium are charged.

There are a number of specific conditions that need to be met in order to issue a Direct Guarantee for irrevocable letters of credit:

• The documents must be accepted by the bank that opened the irrevocable letter of credit
• The irrevocable letter of credit must be controlled by the UCP 500
• The negotiating bank is prepared to pay you as an advance amounts due under the letter of credit
• The credit period is longer than twelve months

• Atradius agrees with the right of recourse that evolves from the issue of a Direct Guarantee